REVIEWER

OPERATION MANAGEMENT

✓ Operations management (OM) is the business function that plans, organizes,

coordinates, and controls the resources needed to produce a company’s goods and
services.

✓ Operations management is a management function. It involves managing people,

equipment, technology, information, and many other resources

✓ Operations management is
responsible for orchestrating all the
resources needed to produce the
final product.
includes:
✓designing the product;
✓deciding what resources are
needed;
✓arranging schedules,
equipment, and facilities;
✓managing inventory;
✓controlling quality;
✓designing the jobs to make the
product;
✓and designing work methods.

Role of operations management - To transform

organizational inputs into outputs

Essential functions of OM:

 Marketing – generates demand
 Production/operations – creates the product
 Finance/accounting – tracks how well the organization is doing, pays bills, collects
the money
 Other business functions — such as accounting, purchasing, human resources, and
engineering – as support services

Why Study OM?

 OM is one of three major functions
(marketing, finance, and operations) of any organization
 We want (and need) to know how goods and services are produced
 We want to understand what operations managers do
 OM is such a costly part of an organization
Where are the OM Jobs?
 Technology/methods
 Facilities/space utilization
 Strategic issues
 Response time
 People/team development
 Customer service
 Quality
 Cost reduction
 Inventory reduction
 Productivity improvement

Characteristics of Goods:
- Tangible Products
- Consistent
- Productions separated from consumption
- Can be inventoried
- Low interaction

Characteristics of Services:
- Produced and consumed at the same time
- Intangible
- High customer interaction
- Unique
- Inconsistent
- Knowledge - based
- Dispersed

INDUSTRIAL EVOLUTION
Middle of 18th century - Mechanization
Beginning of 20th century - Mass production
Beginning of 1970's - Computer and automation
Today - Cyber Physical System

What do OM Managers do?

- Plan, organize, staff, leading and controlling

OM Decision:
- Service and Product Design
- Quality management
- Process and capacity design
- Location
- Layout Design
- HR and job design
- Supply chain management
- Inventory
- Short-term Scheduling
- Maintenance

KEY TERMS
Effectiveness
- is the extent to which objectives are attained.
- the focus of effectiveness is not on cost, but rather on targeting the
correct tasks and completing them in a timely manner.

Efficiency
- Performing activities at the lowest possible cost.
- An efficient process typically contains a minimal amount of wasted labor,
materials, energy, and processing time.

Value Added
- the net increase

Just in time
- the right parts arrived at the right place in the right quantity

Supply Chain Management

- managing the flow of materials

Sustainability
- reduce waste, reuse and recycle products and parts

Total Quality Management (TQM) - a philosophy that seeks to improve quality

SWOT
• A SWOT analysis is a strategic planning technique that provides assessment tools
(used to perform external and internal audits).
• The SWOT Analysis provides information that is helpful in matching
the firm’s resources and capabilities to the competitive environment in which it operates.
• A scan of the internal and external environment is an essential part of the strategic
planning process.

Opportunities and Threats are:

✔ Economic
✔ Social
✔ cultural
✔ demographic
✔ environmental
✔ Political - relations in LGU, national,
outside the country
✔ legal
✔ Governmental
✔ Technological, and
✔ competitive trends and events

O/T - beyond the control

- that could significantly benefit or harm an organization in the future.

• M – MARKET – demand, market share, geographical reach (scope of territory)

• C – COMPETITION – Number of churches around the area
• S – SOCIO-CULTURAL – demographic (age, sex, religion, income status, educ status,
etc.), Attitudes, other religions, attitudes, cultur, beliefs
• T – TECHNOLOGY – technological advancements, internet, innovations
• E – ECONOMIC – economic condition of the area, source/s of income;
• E – ENVIRONMENTAL /Environment – is the community environment friendly or not?
- like pollution level (visual pollution; waste, noise, air, water, etc.), Concern for plants
and animals
-  (typhoon belt, near active volcanoes, fault lines, flood-prone area, landslide-prone?
How’s the peace and order
situation?
• POLITICAL – political condition in the area  political changes; political trends
/ LEGAL - Environmental regulations, government restrictions

Strength and Weakness

- are an organization’s controllable
activities that are performed well or poorly. They arise in the:
✔ Management – PLOCS
(Planning, Leading, Organizing, Controlling, and Staffing)
✔ Marketing - (product/services, promotion, price, place, people/partners, process,
physical evidence
✔ finance/accounting – accounting, budgeting
✔ Operations – People management, process management, financial management,
marketing
management, inventory (skills/materials)
✔ research and development-
benchmarking, trainings, continuous improvement

INTERNATL INDICATOR
- Strategy
- Structure
- Staffs
- Style
- Skills
- Systems
- Shared Values
Quality and Strategy

• Managing quality supports differentiation, low cost, and response strategies

• Quality helps firms increase sales and reduce costs
• Building a quality organization is a demanding task

FLOW OF ACTIVITIES
• organizational practices - leadershipe, mission, vision, training
• quality of principles - quality improvement, TQM tools, just-in-time
• employee fulfillment - empowerment
• customer satisfaction - winning orders

TQM
•Encompasses the entire organization, from supplier to customer.
•is an enhancement to the traditional way of doing business.

Seven Tools of TQM

-check sheets, cause and effect/scatter diagrams, pareto/flow charts, histogram,
statistical process control chart